India rejects demands by Apple on tax incentives

India has finally rejected the key demands made by Apple for customs duty rebate on imported equipment for making in the country.

In a written reply to the Lok Sabha, Commerce and Industry Minister, Nirmala Sitharaman said that "requests regarding such rebate were examined and...not accepted."

Sitharaman said the government has received representations seeking concessions, including 30 percent local sourcing of component, duty exemption on manufacturing and repair units, components, capital equipment and consumables for smart phone manufacturing, service, and repair.

She further said that there would be no exemption from basic customs duty, countervailing duty (CVD) and special additional duty (SAD) on imports of articles needed for the repair of the mobile phones.

The Cupertino-based technology major has asked for incentives from the Department of Electronics and Information Technology (Diety).

Apple had asked for tax concessions including lower import and manufacturing duties, and certain policy exemptions from the Government for setting up a manufacturing unit here in the country.

The company also wanted duty exemptions on the products to be bought from special economic zones (SEZs). Apple had informed the government this year in January that it is ready with a blueprint to begin manufacturing iPhones in India but wants fiscal concessions.

Now that the governement has rejected Apple's ultimatum, it will interesting to see how the company will be pricing the iPhones that will be made in India